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Need Help Negotiating Lease Extension Premium

26-04-2019, 01:08 AM

Apologies for this long post.

I need your help negotiating my lease extension please.
My surveyor says there's no point negotiating it as the landlord's proposed figure on counter notice £18,000 (reduced to £16,000 after I rang and negotiated the counter notice) (Now £15,400 after I applied to FTB) is a good offer.

If a novice like me can reduce it from £18,000 to £15,400 I wonder what a professional can do.

Below is the LL's surveyor's calc.

Reading through FTTB judgements it appears the capitalisation rate should be 6.5% not 6%.

5.00% Deferment
6.00% Capitalisation (this I believe should be 6.5%, shall state tribunal decision on this point)

VALUES (Wondering about these figures as I purchased at £260,000 with benefit of s.42 notice. Similar ppty sold for £289,000 a month prior to my completion)
Freehold Vacant Possession £280,000
Extended Lease Value differential 99% £277,200
Leasehold Vacant Possession £254,800
91.00% Differential (Is this Relativity? The graphs give an average of 94.04%, highest being 95.32% lowest is 92.47% ironically this lowest is the graph of the LL's surveyor but for some reason he uses an even lower figure)

Comment

Comment

It's a shame but he refuses to negotiate with the FH or surveyor.
I told him I didn't even say much before the counter offer was reduced.

His most recent response is below.

"The problem we have always had is that the extended lease value of £285,000 (freehold value of £287,879) compared to the price paid for the existing lease of £260,000 produces a relativity of 90.3%. The purchase price included the benefit of the act which should stripped out. Normally a 3% adjustment is required which reduces the existing lease value to £252,200 excluding the Act. Putting the two together produces a relativity 87.6% and a premium of £16,028".

Yet he had said there was no point him trying to reduce it from the counter offer of 18k.

Comment

If you are only £1,700 apart, I would definitely not incur any more costs, I suggest that you offer to split the difference and avoid the cost of a hearing , which will easily exceed the sum in dispute.

Comment

If you are only £1,700 apart, I would definitely not incur any more costs, I suggest that you offer to split the difference and avoid the cost of a hearing , which will easily exceed the sum in dispute.

I was hoping for the £12k calculation but happy to meet at £14k

Comment

If you are only £1,700 apart, I would definitely not incur any more costs, I suggest that you offer to split the difference and avoid the cost of a hearing , which will easily exceed the sum in dispute.

I would agree totally

The landlord is seeking a full figure but not an outrageous figure. This is because he knows that the costs you will incur arguing will not make it worthwhile.

Going to the Tribunal and being professionally represented will cost circa £5k. Going and representing yourself to the Tribunal will carry risks but will involve you having to prepare the case yourself incurring significant time and effort.

Comment

The landlord is seeking a full figure but not an outrageous figure. This is because he knows that the costs you will incur arguing will not make it worthwhile.

Going to the Tribunal and being professionally represented will cost circa £5k. Going and representing yourself to the Tribunal will carry risks but will involve you having to prepare the case yourself incurring significant time and effort.

Thanks.
​​​​​​​From the above, are there any pointers with which I could negotiate down?

Comment

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